Huawei is the only Chinese company that has more revenue abroad than in China. In 2012, Huawei surpassed Ericsson (that was the world leader in telecommunications and networks at that time). In 2014, Huawei reached an all-time high sales revenue of $46.5 billion and net profits of $4.49 billion.
What makes Huawei so successful? For the founder Ren Zhengfei, Huawei’s value-driven culture is its key to success.
For Ren Zhengfei, the customer is his first and foremost concern. Knowing that many companies have a customer-focused attitude, Huawei distinguishes itself from them by having its employees turning their eyes to the customers and their backs to the bosses.
An example of this customer-first attitude is the implementation of the chew-proof wires. In desert and rural areas in China, rats often chewed the telecom wires, damaging customers’ connections. Unlike multinational telecom companies providing service at that time that did not view this to be their problem, but rather that of the customer, Huawei, considered the rat problem as one the company had the responsibility to solve. Thus, they got widespread experience in developing stronger equipment and materials – such as chew-proof wires — which helped them later on to gain several big business accounts in the Middle East, where similar problems also blocked multinational firms.
For Huawei, hard work is the only way to get opportunities. For instance, in the early years of the company, Huawei provided every new employee with a blanket and a mattress so that the ones who would work late into the night got some sleep in their offices. For one Huawei employee, “The pads were to us a representation of hard work in the old days and this idea has now been translated into the spirit of being dedicated to do the best in anything we do”.
Moreover, for Huawei a dedicated and committed work force makes companies more competitive. In order to promote dedication and make it accepted by its employees, Huawei implemented an incentive performance system. In fact, Huawei is not a public company, and is owned by the employees. In Huawei’s 2014 Annual report, Ren Zhengfei’s shares account for nearly 1.4% of the company’s total, and 82,471 employees hold the rest. The idea behind this is that Ren Zhengfei wants to share both responsibilities and benefits with his colleagues. He wants everyone to act like the boss. However, only those who perform well enough qualify to participate.
By setting the employee-ownership arrangement, Huawei is able to attract and retain dedicated employees and to plan for the long term. For instance, Huawei plans the development of the company by decade, whereas most of their competitors such as Ericsson and Motorola plan it by financial quarter or year. In addition, knowing that it is privately held, Huawei can work on its 10-year plans, while its competitors fight to follow near-term fluctuations of the capital market.
Furthermore, Huawei has implemented the use of a rotating CEO system in which three deputy chairmen take turns acting as CEO for six months each. Meanwhile, Ren Zhengfei maintains his oversight role, acting as a mentor and coach for the acting CEO. A book on new leadership called Flight of the Buffalo by James Belasco and Ralph Stayer inspired this pioneering management system.
Ren Zhengfei avoids making quick decisions and forces himself to take time to think. His company shows these features as it keeps the decision-making power under its own control: no outside investor will have relative control over Huawei. Therefore, they have much more freedom and less pressure from the market to consider their next steps to take. In addition, their system of rotating CEOs helps support a gradual, more democratic decision-making process allowing thus Ren Zhengfei make a gradual decision about his ultimate successor.
In addition, Huawei stresses on “the power of thinking” which is considered as the most valuable thing for the company’s philosophy. For instance, efforts are made to strengthen intellectual exchange. Executives are encouraged to read books outside their field of expertise and books have to be present in each office. Furthermore, ideas have to be shared and exchanged frequently to every employee by both senior executives and Ren Zhengfei. Feedback is always welcome across the company to improve those ideas that will eventually enrich the future vision of the company.
For Ren Zhengfei, his favorite slogan in the early days of Huawei is: We shall drink to our heart’s content to celebrate our success (ren sheng de yi xu jin huan), but if we should fail let’s fight to our utmost until we all die (ju gong jin cui, si er hou yi). Let us take a lesson from Huawei…